|
I'm about to be gifted a small amount of money expressly for an IRA investment each year until it's used up. The giver is trying to get me to bring the funds to a financial/investment group that they use for some of their portfolio. The reason given is that it gives me access to "their guy" for advice along the way. I'm mid 30s with uncomplicated finances and don't envision needing much from him. I'm skeptical of having a smaller firm and a middle man as I currently use Fidelity index funds almost exclusively. Is this really a benefit? I assume I can continue to invest in index funds through him. How should I vet the firm and what questions should I ask him before agreeing to it? I believe the money will still be given to me if I refuse to use their guy fwiw.
|
#
?
Oct 16, 2016 19:27
|
|
|
|
| # ? Apr 24, 2024 03:09 |
|
|
I would probably be skeeved out enough by the whole thing to consider just turning down the money. Sounds like you know what's up and how to handle your poo poo, so go for it I guess? To answer your question, no a middle man is not a benefit, and it's very likely they won't offer you cheap mutual funds. If they're bribing you to use their services, they're going to offer you expensive high commission active funds that, pending evidence that will never materialize, you should assume will perform worse than your current index fund strategy.
|
|
#
?
Oct 17, 2016 12:49
|
|
|
Depends on if the amount of money is worth the hassle, either with dealing with some company that will probably skim some money for no real benefit, or with dealing with the gift giver asking you to move your money to the company continually if they're pushy.
|
|
#
?
Oct 17, 2016 15:32
|
|
|
Ugh, sounds awful. If you can resist a high-pressure sale, you could meet with the guy once and then tell your uncle or whatever that you've decided to keep the money in Fidelity instead. If you're close with the gifter (I'm assuming it's family), you will likely be in the unenviable position of having to explain that their advisor sucks balls and that's why you don't want to go with them.
|
|
#
?
Oct 17, 2016 19:44
|
|
|
If it is a small amount fees will kill it. I am sure the "my guy" is the one instigating this stupid setup. Tell the donor to put the cash in your account or go spend it on investing 101 classes, or better yet tell them why they should fire their guy with fancy charts that show you can't beat the market, unless you are me, my picks never lose!
|
|
#
?
Oct 18, 2016 16:31
|
|
|
Thanks. This is obviously reinforcing my thoughts. It is indeed family.
|
|
#
?
Oct 19, 2016 02:01
|
|
|
Why the immediate assumption that this advisor sucks balls? I refer clients to advisors I trust all the time. This family member clearly has their poo poo together enough to be willing to just gift you some money for your retirement and they trust this advisor.
|
|
#
?
Oct 21, 2016 19:09
|
|
|
Kinson posted:Why the immediate assumption that this advisor sucks balls? I refer clients to advisors I trust all the time. This family member clearly has their poo poo together enough to be willing to just gift you some money for your retirement and they trust this advisor. The OP referred to "a financial/investment group that they use for some of their portfolio", and also referred to Fidelity by name. If the alternate place was somewhere like Vanguard or Schwab or Fidelity, he probably would have referred to them by name as well, so I assume it is a small shop. So it sounds like a small shop like American Funds. Smaller places typically haven't adopted the new index fund, low fee model and sell mostly high fee "active" funds, where the adviser is really a salesperson who is on commission and incentivized to sell worse investments. Even if the adviser is an awesome guy that really knows his stuff, he would still be limited to a crappy universe of funds in a scenario like that. It IS just an assumption though based on the phrasing and stuff so it could all be wrong. The OP should probably specify what investment firm he's being referred to by his family member.
|
|
#
?
Oct 21, 2016 19:35
|
|
|
Because "financial advisor" so frequently means "guy with no particular expertise who just wants to sell you bad products and earn the commission". Especially when it's friend or family. There's no guarantee that this one isn't one of the 90% who sucks but it sure is likely.
|
|
#
?
Oct 21, 2016 19:40
|
|
|
It's Edelman Financial. Without having sat down to talk with the guy, it looks like Edelman charges about 2%. Family member just told me year to date they earned about 7.25%. Obviously not all index funds and obviously a much different financial situation than me. Edit- nice to hear he may not suck balls!
|
|
#
?
Oct 22, 2016 04:44
|
|
|
That site has little video episodes about money. I picked some clips to watch. Clip 1: He tells a 32 year old to invest in 100% stocks every month until she retires. Not actually the worst advice, but not exactly the answer you expect from a professional financial adviser. Clip 2: He doesn't like gold, because it is "well into bear market territory", but investing in outright commodities and futures makes sense for 5% of a portfolio. They recommend at most 20% non-US stocks because foreign stuff is scary and some countries will just nationalize companies out of nowhere (??). Clip 3: An old man says inflation is coming BIG TIME in the next few years, and asks Edelman if he should refinance. Edelman agrees and says the old man should refinance his free and clear house in order to increase his lifestyle, since rates are historically low. Clip 4: They advise anyone in the 25% bracket or higher to use a traditional IRA instead of a roth. Overall his advice is OK, but nothing special. Based on what he says, you can completely duplicate his investing advice by buying 50% Vanguard Global Equity Fund and 50% Vanguard Total Stock Market Fund, which would result in an 80% US / 20% Foreign mix of 100% equities. Note: I am not recommending this, just saying that's essentially what you will get. Using actual S&P 500 data over the past 35 years, If you invest $5k per year for 35 years at 2% you will have $985,422 at the end. The same investment at 0.05% will result in an ending balance of $1,587,571. I can't imagine what kind of value any FA could provide that is worth literally more than 1/3 of all your money over your lifetime.
|
|
#
?
Oct 22, 2016 05:22
|
|
|
imandyyo posted:It's Edelman Financial. Without having sat down to talk with the guy, it looks like Edelman charges about 2%. Family member just told me year to date they earned about 7.25%. Obviously not all index funds and obviously a much different financial situation than me. That 7.25% figure is completely useless and if anybody suggests that recent performance is a reason to make any particular choice, you should 110% ignore them. The 2% fee on the other hand is guaranteed every year and is utterly rapacious - Droo even ran the numbers for you. So yeah, this guy sucks balls if that's what he's going to charge you. Go check out the long-term investing thread, I think the OP still has actual information in it.
|
|
#
?
Oct 22, 2016 09:25
|
|
|
Droo posted:The OP referred to "a financial/investment group that they use for some of their portfolio", and also referred to Fidelity by name. If the alternate place was somewhere like Vanguard or Schwab or Fidelity, he probably would have referred to them by name as well, so I assume it is a small shop. So it sounds like a small shop like American Funds. I would also venture to guess that there's a 99% chance that if he walks in the door he is going to be pitched a whole life insurance product of some kind, which I am certain this advisor is more interested in than 2% of his IRA or whatever. The whole distant relative warm contact thing is so classic.
|
|
#
?
Oct 22, 2016 13:17
|
|
|
Yeah I have a strong morbid curiosity to see what comes of the eventual meeting. Like I said I can't possibly imagine what kind of "planning" could apply to me now. And if I end up in a position to need it I can pay for it then. Lol if I get the sales pitch for life insurance etc.
|
|
#
?
Oct 22, 2016 14:39
|
|
|
|
| # ? Apr 24, 2024 03:09 |
|
|
imandyyo posted:Yeah I have a strong morbid curiosity to see what comes of the eventual meeting. Like I said I can't possibly imagine what kind of "planning" could apply to me now. And if I end up in a position to need it I can pay for it then. Lol if I get the sales pitch for life insurance etc. Just accept the gift and politely meet with the guy inasmuch as that's an implied condition of the gift, have a free coffee or whatever. Don't let him talk you into anything on the spot and don't be afraid to ask questions, such as "why should I use your product as opposed to a minimum expense ratio diversified index fund strategy".
|
|
#
?
Oct 22, 2016 15:24
|
|